INVOICE FINANCE - invoice factoring

Invoice Factoring

Unlock funds from your outstanding invoices to improve your cashflow and alleviate the burden of credit control with a team of experts.

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What is invoice factoring?

Invoice factoring is a type of invoice finance that enables a business to improve their cashflow by accessing cash for their unpaid invoices.
The business effectively uses their debtor book of unpaid invoices as security for the loan form an invoice factoring company. This allows businesses to access funds quickly rather than waiting for customers to pay their invoices.

The invoice factoring company will take over the responsibility of collecting payment from the customer. Once the customer pays the invoice in full, the factoring company deducts its fee (the discount) and remits the remaining amount to the business. The fee is typically based on factors such as the creditworthiness of the customer, the size of the invoice, and the length of time until payment is expected.

How does invoice factoring work?

Invoice factoring works by using unpaid invoices owed to your business as a way to access capital. 

The process works like this: 

  1. Your business operates as usual, selling goods or services to customers and generating invoices.
  2. Submit the invoice to the invoice factoring provider
  3. The invoice factoring company instantly advances a percentage of the invoices total value, typically this is 90%. 
  4. The invoice factoring company takes over the responsibility of collecting payment from the customers.
  5. Once the customers pay their invoices, the factoring company deducts its fees and remits the remaining amount to your business.


Why use invoice factoring?

Get the funds you need without putting business or personal assets at risk with invoice factoring. 

  • Fast Invoice Payments

Instead of waiting weeks or months for your invoices to be paid, you'll be able to advance a flexible percentage of their face value within as little as 24 hours. Once approved, some invoice factoring companies can arrange the transfer of your funds the same day.

  • Outsource credit control

Efficiently managing your sales ledger and credit control processes can be time consuming. With invoice factoring, the factoring company takes over these key tasks for you by chasing up invoice payments, credit checking new clients and managing your sales ledger.

  • Improved cashflow

Invoice factoring provides immediate access to funds, helping your business to maintain a healthy cashflow and meet financial obligations.

When should your business use invoice factoring?

If your business raises invoices and you find that regular outstanding invoices are impacting your cashflow, invoice factoring could be a good option for your business. 

You could use invoice factoring for: 

  • Rapid growth

If your business is experiencing high growth and needs funds to support increased sales, invoice factoring can provide the necessary working capital.

  • Seasonal fluctuations

If your business operates in a seasonal industry where sales fluctuate, invoice factoring can help bridge the cashflow gaps during slower periods.

  • An urgent cash need

When unexpected expenses or opportunities arise, factoring allows businesses to access funds quickly without going through a lengthy loan approval process.

  • Improved cashflow with timely invoice payments

Invoice factoring involves the factoring provider chasing your invoices from customers for you. As invoice factoring providers are experts in credit control, they can help to ensure your customers do not pay their invoices late. 

Who is invoice factoring for?

Invoice factoring is for any business that wants to improve their cashflow by avoiding lengthy invoice repayment terms and overcome the burden of chasing up overdue payments. 
Rather than spending much needed working capital on an in-house credit control team during the early days of your business, you'll be able to outsource these key tasks, leaving you to concentrate on growing your customer base.

To be eligible for invoice factoring, your business will need to:

  • Raise invoices to customers
  • Have creditworthy customers 
  • Want to give credit control to the factoring company

Ready to get started?  

Apply for invoice factoring today.


You can compare invoice factoring companies using your Capitalise for Business account. Simply search for invoice funding and you will be able to compare invoice factoring companies from our panel of lenders. Your dedicated funding specialist will help you to navigate the best option for your business.

Invoice factoring can give a business several benefits:

  • Provides immediate access to funds, improving cash flow 
  • Eliminates the need for debt by converting accounts receivable into cash, making it an attractive alternative to traditional loans. 
  • Streamlines operations by outsourcing the collection process, saving time and resources for businesses. 
  • Offers flexibility, scalability, and fast approval, making it a valuable type of finance for a business that needs quick and efficient funding solutions.

Like any business loan, there are a couple of risks to bear in mind with invoice factoring: 

  • It can involve a long term contract which means you will not be able to stop using invoice factoring until the term length is up.
  • Loss of control of your debtor book can impact customer relationships if the factoring company pushes too hard on an overdue payment.
  • Reliance on the credit worthiness of your customers. If a customer fails to ever pay, you may be responsible for the repayment of the invoice to the factoring company.

Invoice discounting and invoice factoring are both types of invoice finance. The core difference is that with invoice factoring, the factoring company assumes control of the debtor book and chases your unpaid invoices for you. With invoice discounting, you still receive funds for your unpaid invoices, but you retain credit control.

In the UK, invoice factoring companies are not regulated by the Financial Conduct Authority (FCA).
With this in mind, you should look to work with experts that will ensure you do not work with a provider that might have lots of hidden fees.
At Capitalise, we are FCA regulated, our funding specialists can help you to navigate which invoice factoring provider is right for your business.